Does aid to the third world do more harm than good?

Has any country developed by holding out a begging bowl? Has aid succeeded in bringing one single country out of the ‘third world’? It is true that individual projects have transformed the lives of certain individuals and communities. However, Andrew Mwenza, the internationally renowned journalist from Tanzania, argues passionately that in general, aid has not only been ineffectual, but worse, it actually discourages development.

Most of the aid to the third world comes from vast institutions such as the International Monetary Fund, the world Bank and the US Agency for International Development. The very names of these organisations are deliberately misleading. There is nothing charitable or altruistic about them- they’re all political instruments. The fact that the second largest recipient of funding from USAID is Israel speaks volumes. The objective of a loan is to make money through charging interest- “aid” is therefore about making a profit, not about development, and consequently “aid” has never and will never rid one single country of poverty.

It is often claimed that aid has brought about development in the past, for example, the Marshall Plan, when the US funnelled billions of dollars into Europe after World War Two, to enable reconstruction. However, a key concern at this time was the spread of communism- the US saw an economically stable Western Europe as a fundamentally important way of preventing the USSR from pushing westwards. Unfortunately, developing the third world today doesn’t complement any US agenda, and therefore the type of aid on offer is quite different.

Andrew Mwenza examines the way in which aid affects Uganda. He points out that the billions on offer from the World Bank and other aid agencies dwarf the potential profits of business enterprise and taxation, so that it’s not worth subsidising and encouraging emerging projects and companies. Moreover, “aid” feeds corruption- working for the state becomes the most lucrative profession. Uganda has over 70 ministers, all with chauffeur driven cars, and there are hundreds of “presidential advisors”, many of which have never even met the president. Of course, most aid agencies in the third world also drive around in brand new Toyota Landcrusiers, while most of the population continues to live on less than a dollar a day.

‘Aid projects allow us to live in the fantasy that the third world can develop without us having to change our way of life’

Somehow there is still an expectation in the West that by now, the billions poured into aid projects in the third world should have dealt with the problems of disease, poverty and underdevelopment. While the sums sound huge, they don’t even represent the pathetic 0.7% of our GDP that we pledge time and time again. Aid projects allow us to live in the fantasy that the third world can develop without us having to change our way of life, for example, by changing the trade regulations, halting the production of surplus goods, cancelling debt and paying a fair price for raw materials. The failure of aid projects to achieve their goals is blamed on the corruption of the third world governments, while the success in individual cases can be used to maintain the illusion that these examples could be universalised to rid the world of poverty.

In his book, ‘The End of Poverty’, Jeffrey Sachs, the renowned economist, describes some of his successful projects around the world, which have brought wells, schools and hospitals to remote communities. He sets out to prove that the world has the financial resources to eradicate poverty, and that through schemes such as the ones he pioneered, the millennium goals could be reached. But it is only after several hundred pages that he gets down to the nitty gritty- a 10 point plan, of which the most crucial issues are the transformation of the World Bank, the IMF and the UN. He offered no suggestions as to how this can be achieved. This is the heart of the matter: without these drastic changes, the “aid” that’s on offer today will only bring pitiful progress.

When Sankara became president of Burkina Faso in 1983, he declared he would not pay back the debts to the World Bank and he defied the western neo-liberal agenda, encouraging the people to buy the produce of their country, and cutting down on imports. For the next four years, Burkina Faso was one of the few African states to experience economic growth. In 1987, Sankara was assassinated in a coup, and since then, like most of Africa, Burkina Faso has been in the grip of “aid”, and development has stagnated. Despite some debt cancellation in the late 90s, many African states continue to pay over 1% of their GDP to the World Bank and IMF to pay back their debts.

The emerging economic giants- China, Brazil, India and Russia, are all countries which refuse to follow the model that the West has tried to impose on them. Many countries with enough resources to go it alone, such as Venezuela with its vast oil supplies, use their clout to free themselves of the straight jacket of “aid” encouraged by the West. Statistics showing the development of the third world are all hopelessly distorted by the examples of China and India. And one thing is certain: they haven’t developed by holding out a begging bowl.